Emprenta Impact Investing Fund

Who we are

Emprenta supports Mexican SMEs focused on the lower and middle classes that embrace sound social practices to grow in a sustainable way.

Emprenta’s triple bottom line approach provides financing to SMEs whose models fill market gaps in product availability, affordability or suitability. Emprenta rigorously screens and structures deals to mitigate risk and provide financial returns while working with SMEs to improve social and environmental impact.

Overview

Market Opportunity in Mexico

5,144,000

Number SMEs

52.0%

of GDP

72.1%

of total employment

52.0%

of GDP

SMEs are critical to Mexico’s economy, but lack funding. According to the World Bank, almost 65% of Mexican small and more than 50% of medium-sized firms face growth limitations due mostly to lack of financing.

Impact Investing

Impact investing is a global phenomenon supported by companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets.

Despite the surge of local impact investors in Mexico, impact investing has still not met its full potential and requires more resources to promote social and environmental change in the country. Businesses creating social and environmental impact need these resources in Mexico to scale and have greater impact.

Overview of SMEs in Mexico

Emprenta uses the OECD definition of small and medium sized enterprises (SMEs):

Mexican SMEs: Crucial but Lack Financing

SMEs are Essential to the Mexican Economy

5,144,000

Number SMEs

99.8%

of total business

72.1%

of total employment

52.0%

of GDP

But SMEs are Restrained by Unmet Financing Needs

SMEs are the largest source of Mexican employment, but account for only 20% of commercial loans.

Only 6% of Mexican SMEs are able obtain financing versus 20% in Latin America and the Caribbean.

Acording to the World Bank, almost 65% of Mexican small and more than 50% of medium-sized firms face growth limitations due mostly to lack of financing.

The lack of funding to SMEs is driven by banks preference towards larger deals and clients as well as constraints of non-banks.

SMEs market is also less attractive to banks due to smaller ticket sizes and lower profitability than larger corporate clients.

Breakdown Commercial Loans (MXN Billions)

Limited and Costly SME Financing Options

According to Mexico’s Central Bank, SMEs in Mexico are typically being financed through costly supplier credit, expensive credit cards, and non-banks.

In Mexico from 2009-2012, the premium paid by SMEs compared to large companies increased almost 2% despite their probability of default falling from 8% to 4% while the default level for large companies remained the same.

Impact Thesis

Emprenta´s mission is to generate “triple bottom line” sustainable growth.

Emprenta generates social and environmental impact while targeting sound financial returns through financing Mexican SMEs.

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